Trade wants Tea Board to evaluate e-auction system

Citing several lacunae in the e-auctions mechanism, tea traders have urged the regulator, Tea Board of India, to evaluate the online auction system before its wide-scale roll-out.

The Federation of All India Tea Traders Association (FAITTA), the apex tea trade body, has warned that the public auction system could have serious ramifications for the trade under its current e-auctions systems.

“Unfortunately, there are several lacunae in the system, and as a result it has ended up working like a tender process, and not a fair price discovery mechanism,” Viren Shah, Chairman of FAITTA, said in a statement. The tea trade had migrated from a manual auction system to e-auction in 2016 as a part of the auction reform initiative for fair price discovery.

The e-auction was implemented in Coonoor, and the Board has proposed to expand the system to the remaining five auction centres.

In mock trials, the tea lots went to the buyer who had entered the highest bid price, regardless of the actual auction bidding trend and price increments leading up to the second highest bidder price, FAITTA said.

“The faulty logic of knockdown of lots needs is required to be revised. The maximum bid price logic for knockdown could have serious disadvantages in the long-run and impact buyer participation in the auctions, and be counterproductive to the Tea Board’s intent, and interest of stakeholders,” Shah stated.

FAITTA said the entire tea trade is against this system, and warned that a hasty roll-out could have serious unintended consequences.

“We have conveyed our concerns to the Tea Board. We have demanded that the features of the new auction system be communicated to all stakeholders in a transparent manner. Any system should not be implemented without wider consultation within the trade,” he said.